All Forum Posts by: Justin Windham

A Solo 401k has a lot of significant advantages over an IRA LLC.

Dmitriy is correct. You should double check with your CPA to see if you have or can generate earned income from self-employment. If so, and you don't have any full-time non-owner employees, you're good to go for a Solo 401k.

Welcome, Luke. It's good to see more people in Colorado joining the site!

Hi, my name is Justin Windham. I am the owner of Discount Solo 401k. We specialize in creating self-directed checkbook control 401k plans that can invest retirement funds directly into real estate, among other assets.

I've been creating self-directed retirement accounts since 2003 and the checkbook Solo 401k is the best of the best.

For more information, feel free to give us a call, email us, or visit our website:

Phone: 800-716-1970
Email: [email protected]
Website: www.discountsolo401k.com
http://www.biggerpockets.com/companies/DiscountSol...

Hi Adam. It seems you have 2 potential interests in self-directed retirement accounts - funding kids' college and for your own investment.

As you mentioned, the Solo 401k is likely to be less expensive and will definitely be the more flexible and powerful option for your investing (no need for LLC to have checkbook control, no need for a custodian, much higher contribution limits, etc).

Another potential benefit is the participant loan feature of the Solo 401k which can allow you to borrow funds from the 401k without taking an actual distribution. This may be helpful when it comes time to fund college tuition. You wouldn't be able to do this with an IRA.

Perhaps some others will chime in with more perspectives, but I almost always favor the Solo 401k over an IRA if one is eligible.

Does your current 401k allow for participant loans? If so, and you have enough in your 401k to finance the necessary repairs (you can borrow up to 50% of your vested 401k balance, up to $50k), that may be the simplest way to go about financing the repairs.

Another thing to consider is whether the needed repairs cost less than difference between the likely sales price as is and the likely sales price after the repairs.

The costs can vary quite a bit depending on the service provider or providers. With a self-directed IRA, you must have a custodian (as with any IRA) and most custodians will charge a setup or application fee with fees for transactions and/or asset-based fees being common too. To have checkbook control, you would also need an LLC to be created for the IRA. Some custodians allow this while others do not. The LLC will have a fee for setup (organization) as well as an ongoing filing fee with the secretary of state where the LLC is formed. A facilitator will charge their fee on top of that.

If you are eligible for a Solo 401k, that is often the best route to go. There is no need to form an LLC to have checkbook control and you do not need a custodian, so it usually ends up costing less money and you have several advantages over the IRA LLC structure.

If you just want to borrow from your existing 401k, the business with no employees does not apply. As long as your current 401k allows for participant loans, you can borrow the funds and use them in your project.

I believe the mention of the business with no employees was referring to qualifying for a Solo 401k. A self-employed individual can setup a Solo 401k for his or her business that allows for participant loans as well as direct investment into real estate (among other assets), as long as they don't have any full time non-owner employees in the business. Again, this doesn't apply if you are just taking a loan from your 401k at your employer.

Wow. Thanks for posting, @Joshua Dorkin. Nice article, @Justin Pierce 

A family member of mine got pretty involved financially and emotionally in Dalbey's products. I'll have to share this with him.